WRAP: Load shedding in winter unlikely - Eskom

Load shedding in winter unlikely - Eskom

While the risk of load shedding always exists it is not likely to occur this winter, said Eskom Acting CEO Phakamani Hadebe.

At a media briefing on Thursday, the power utility gave a quarterly update on the state of the system. Load shedding was the topic of the day, and Hadebe, along with other officials assured that Eskom was taking steps to manage plant performance and coal stock levels to mitigate the risk.

"Plans are in place to improve stockpile levels at the power stations that are currently below minimum stock levels," he said. "We think holding all things constant, we are not going to have load shedding."

He explained part of the strain on the coal supply is linked to problems at Tegeta which is in business rescue. Tegeta's Optimum Coal Mine supplies coal to Eskom's stations.

The previous board and management tried to deal with it by approaching National Treasury to intervene with procurement processes. At the time Treasury was concerned about corporate governance issues at Eskom.

"The process of coal procurement is different to going to a shop and buying bread. It is not as simple as going to shop to buy bread," said Hadebe.

Additionally, capital constraints have added to the strain on coal supply, he explained. Eskom has 35 days of coal stockpile and the company is sourcing additional coal from suppliers to ensure that there are outages in winter.

Last week Eskom said that seven of its stations had less than 20 days of coal supply, now there are only six, Hadebe proudly said.

Eskom is also in discussion with Tegeta's business rescue practitioners to ensure there is coal supply at Hendrina station, to ensure there is "sufficient coal" in winter. 

"We would be fooling ourselves if we think that there are no problems at Eskom, we are going to continue improving revenue collection.... but we are on the right trajectory" said Hadebe.

Hendrina Power Station

The coal supply scare reported at Hendrina last year was also raised. Thava Govender, group executive of generation answered questions about an investigation which took place at the power station.

Recommendations were made to have action taken against senior people in the primary energy environment and at power stations. Eskom has taken action against these officials, but would not provide further details as it could jeopardise further investigation and disciplinary action to be taken. 

"Certain issues at hendrina will not be repeated," said Govender. He reiterated that Eskom is negotiating with Tegeta's business practitioners about coal delivery.

"Optimum has not supplied coal to Hendrina. The last bit if coal delivered was in the beginning of March. Since the beginning of March we have not received from them, we have been trucking in coal because of that."

The Hendrina contract comes to an end in June 2019.

Criminal charges    

Hadebe also answered questions on whether the power utility has laid criminal charges against those found to be guilty of misconduct. He explained that the power utility will not stop at dismissals and will lodge criminal cases if it is warranted.

The power utility has not yet lodged criminal charges, but not because they do not want to, said Hadebe. There are five investigations taking place, including that of the Special Investigating Unit, the National Prosecuting Authority (NPA), National Treasury, Judge Zondo’s inquiry into state capture and Eskom’s internal investigations.

Eskom has been consulting with the NPA over the matter but they have not yet reach agreements on how to consolidate the cases. "Our intention once agreeing is to launch criminal charges," he said.  

Hadebe says that he is not aware if former group CEO Brian Molefe has paid back the outstanding R11m he received in pension payouts. 

Issues at Hendrina Power station will not reoccur, Thava Govender, group executive of generation said.

Last year amaBhungane reported that coal supply to the power station was threatened.

Govender answered questions about an investigation which took place at the power station. Recommendations were made to have action taken against senior people in the primary energy environment and at power stations.

Eskom has taken action against these officials, but would not provide further details as it could jeopardise further investigation and disciplinary action to be taken. 

"Certain issues at hendrina will not be repeated," said Govender.

He reiterated that Eskom is negotiating with Tegeta's business practitioners about coal delivery. "Optimum has not supplied coal to Hendrina. The last bit if coal delivered was in the beginning of March. Since the beginning of March we have not received from them, we have been trucking in coal because of that."

Hendrina contract comes to an end in June 2019.

On tariffs: Eskom is looking at all options but no decision has been taken yet.

Eskom's Acting CEO Phakamani Hadebe says that the power utility cannot inform the public on employees which are dismissed over misconduct, as this is a contract between the employer and the employee.

However he explained that if a case of misconduct should be escalated to the courts then South Africans should be made aware of the dynamics of the issues. "Legal processes must take their full course," said Hadebe.

He added that the power utility will not stop at dismissals and will lodge criminal cases if it is warranted. 

The power utility has not yet lodged criminal charges, but not because they do not want to, said Hadebe.

There are five investigations taking place, including that of the SIU, the NPA, the Hawks and National treasury.

Eskom has been consulting with the NPA over the matter but they have not yet reach agreements. 

"Our intention once agreeing is to launch criminal charges," he said.

Hadebe added that the Hawks, and SIU must complete their processes before they can lodge criminal charges. 

During the question and answer session, Eskom spokesperson Khulu Phasiwe refuses to take questions from former Eskom employee, turned energy expert Ted Blom as it is essentially a "media briefing".

 

Eskom's Acting CEO Phakamani Hadebe spoke frankly on the power utility's relationship with suspended executive Suzanne Daniels.

Eskom charged Daniels for serious misconduct earlier this year, but Hadebe said that an investigation into the matter has not started.

Daniels was to return to work in March after the Commission for Conciliation, Mediation and Arbitration found that her original suspension was "unfair".

"As the new board we do not have anything against her at all," Hadebe said. 

However when the new board took over, new issues came up which the new board wanted her to answer to. 

Hadebe said planned lifestyle audits for officials will start next week, the audits were delayed because of a legal process.

Eskom will appoint a private company to do the audits today.

The Eskom Acting CEO said plans are in place to improve stockpile levels at the power stations that are currently below minimum stock levels.

Eskom earlier reported that seven power stations are running on coal stock piles.

Apart from taking surplus coal from other power stations, Eskom will also talk to suppliers to give additional coal from that which has been ordered.

"We would be fooling ourselves if we think that there are no problems at Eskom, we are going to continue improving revenue collection.... but we are on the right trajectory" said Hadebe.

Hadebe said while the risk of load shedding always exists it is not likely to occur this winter, as Eskom has implemented plans to manage a shift in plant performance and coal stock levels.

"Plans are in place to improve stockpile levels at the power stations that are currently below minimum stock levels," he assured South Africans at the quarterly update of the state of the grid system.

Hadebe told the briefing at Megawatt Park that Eskom has 10 000 MW available for planned and unplanned load shedding.

He explained part of the strain on the coal supply is linked to problems at Tegeta which is in business rescue.

Tegeta's Optimum Coal Mine supplies coal to Eskom's stations. 

The previous board and management tried to deal with it by approaching National Treasury to intervene with procurement processes.

At the time Treasury was concerned about corporate governance issues at Eskom. 

"The process of coal procurement is different to going to a shop and buying bread. It is not as simple as going to shop to buy bread," said Hadebe. 

But he assured Eskom was doing a number of things on the matter. Additionally capital constraints have added to the strain on coal supply, he explained. 

Hadebe says Eskom has 35 days of coal stockpile and that the company is sourcing additional coal from supplies to ensure that there are outages in winter.

Last week Eskom said that seven of its stations had less than 20 days of coal supply, now there are only six as Komati is now online.

Eskom is also in discussion with Tegeta's business rescue practitioners to ensure there is coal supply at Hendrina station, to ensure there is "sufficient coal" in winter.

Eskom Acting CEO Phakamani did not waste time on clarifying whether there would be load shedding this year.

In a briefing about the state of the system, Hadebe said: "We think holding all things constant, we are not going to have load shedding."

Eskom's Acting CEO Phakamani Hadebe starts the briefing.

Eskom meanwhile dodged a Fitch ratings cut on Wednesday, but the ratings agency has kept the utility on negative watch.

Fitch affirmed Eskom's 'BB-' credit rating, despite its liquidity challenges.

The power utility was dealt a blow earlier this year when Fitch Ratings and S&P Global Ratings downgraded its bonds to junk.

Fitch affirmed Eskom's long-term local currency issuer default rating (IDR) and unguaranteed local currency senior unsecured ratings at speculative grade of 'BB-'.

"We are encouraged by Fitch Ratings’ decision to affirm Eskom’s credit ratings," said Eskom acting CEO Phakamani Hadebe.

South Africans will learn if load shedding will be a reality this winter as Eskom Acting CEO Phakamani Hadebe is expected to brief the public on the state of the system from Megawatt Park on Thursday.

The state power utility has been dealing with a coal supply shortage. Last week Eskom issued a statement indicating that seven of its power stations have less than 20 days of stock piles. Overall the coal stockpile levels are at 35 days, excluding Medupe and Kusile power stations.

Eskom has also claimed that its coal supply problems are linked to the fact that Tegeta, which owns Optimum Coal Mine, is in business rescue. Tegeta supplies three stations; Hendrina, Komati and Majuba, Willy Majola, acting group executive of transmission told Parliament’s portfolio committee on public enterprises in April.

Eskom board member Neli Magubane told the Standing Committee on Appropriations last week that the national grid is stable. She also said that Eskom has plans in place to manage primary energy resources and ensure healthy stock piles. The details of this plan are to be revealed at today’s briefing.

Meanwhile independent energy expert Ted Blom told Fin24 on Wednesday that Eskom’s board should have foreseen a risk of coal supply shortages six months ago. He said there is a 50% chance there will be load shedding this winter.

The briefing is set to start at 10:30.

Chris Yelland, the investigative editor of EE Publishers, revealed on April 16 that the coal supply problem has become so serious that Eskom’s primary energy division has allegedly recommended to the utility’s new generation head, Thava Govender, that a coal supply emergency be declared.